SC dismisses SLP regarding ITC mismatch in GSTR-2A and GSTR-3B

 This Tax Alert summarizes a recent decision ^[1] of the Supreme Court (SC)dismissing the special leave petition (SLP) filed by the Revenue against the Calcutta High Court (HC) judgment ^[2] regarding input tax credit (ITC) mismatch in Form GSTR-2A and GSTR-3B.

Earlier, Calcutta HC had observed the following:

• Press Release dated 4 May 2018 clarified that there shall not be any automatic reversal of ITC in the hands of buyer due to non-payment of tax by the seller. In case of such default by the seller, recovery shall be made from the seller, however, reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations.
• Press Release dated 18 October 2018 clarified that the facility to view the details in GSTR-2A is in the nature of taxpayer facilitation and does not impact the ability of the taxpayer to avail ITC on self-assessment basis in consonance with the provisions of Section 16 of Central Goods and Services Tax Act, 2017.
• Reference was made to the SC ruling in case of Bharti Airtel ^[3] wherein the Court had explained the effect and purport of Form GSTR-2A.
• Reliance was placed on Delhi HC ruling in case of Arise India ^[4] dealing with similar matter under Delhi Value Added Tax Act, 2004.
  
  Accordingly, HC set aside the demand on the recipient in absence of any investigation done in case of supplier whose invoices are not reflecting in GSTR-2A. Aggrieved, Revenue preferred an SLP before the SC.
  
  SC held that having regard to the facts and circumstances of the case and the extent of demand being on the lower side, it is not inclined to interfere in these matters and accordingly, dismissed the SLP.
  
  Comments:
• Since there are negative rulings on this matter by the Patna [TS-407-HCPAT-2023-GST] and Madras HC [2023 (73) G.S.T.L. 6 (Mad.)], it would be relevant to analyze whether doctrine of merger applies and it can be said that SC has decided on the question of law in favor of taxpayers.
• It would be relevant to examine the applicability of this ruling post introduction of Rule 36(4) w.e.f. 9 October 2019 and insertion of Section 16(2)(aa) w.e.f. 1 January 2022.
• CBIC had issued Circular No. 183/15/2022 dated 27 December 2022 to deal with cases where ITC availed in GSTR-3B was different from amount reflected in GSTR-2A due to incorrect details furnished by the supplier in GSTR-1.